Chicago Board Of Trade, Trading Agriculture and Precious Metals
The Chicago Board of Trade (CBOT) has a long and distinguished history, since it was launched back in 1848.
Today it is part of the largest, probably most diverse global commodity exchange, after the merger of Chicago Mercantile Exchange Holdings, Inc and CBOT Holdings in July 2007.
Chicago Board of Trade has operated an open outcry auction system on the exchange floor for many years and this has recently been gradually displaced with an integrated electronic trading platform.
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With the trend towards making trading commodity futures and other products more available to a fast growing retail investor market, the shift to electronic trading platforms is inevitable. Just look at the monthly data on grain futures contracts volume since 2006. They show the significant shift from open auction to the electronic platform.
For example, 10,000 corn futures contracts were traded daily in July 2006 out of a total volume of about 180,000 per day.
But in April 2008 the roles are reversed, the the open auction system making up only 50,000 out of a total daily volume of 300,000 corn futures.
The e-CBOT trading system has now been replaced by the CME Globex platform, as part of the combined CME Group.
Trading times for this electronic platform are 6.30 pm to 6.30 am and 9.30 am to 1.45 pm Central Time, Sunday to Friday.
Trading Agricultural Commodities
You can trade the agricultural commodities on CBOT, including corn futures which have been the focus of attention recently with the global food crisis and the link to use of the grains for biofuel production. Weather patterns can have profound impacts on crop yields with delays in the Midwest planting . For example, corn yields can fall by around 1.5 bushels per acre per day for every day planting is delayed beyond mid-May.
These changes will be reflected in futures prices on the Minneapolis Grain Exchange (MGEX) and Kansas City Board of Trade (KCBT) as well as on CME Globex.
There is clearly a long term supply problem here, given the growing demand for alternative energy and fuels.
And it is CBOT which introduced an ethanol futures contract in 2005, anticipating the massive growth in this sector.
Agricultural commodity futures traded on CME Globex:
Trading Precious Metals You can also get exposure to precious metals on CBOT. In fact, the exchange first traded silver futures contracts in 1969, while it was not until 1979 that CBOT started trading 100 troy ounce gold futures contracts.
New Trading Platform And further change is now in the pipeline, following an agreement that NYSE Euronext will purchase the CME Group’s Metal Complex, including the precious metals, formerly traded on e-CBOT.
These former CBOT precious metals will soon be traded on LIFFE CONNECT, the NYSE Euronext platform. It is amazing to see how these commodity markets evolve and just keep growing through seismic global events.
Now the markets face continuous challenges of technological progress and new tests such as the surging demand for ethanol for transport and a world population demanding more food.
If these mergers and acquisitions lead to greater transparency, efficiency and participation then they will have achieved a higher purpose.
What would the pioneers of the Chicago Board of Trade back in 1848 have made of all these 21st century developments?
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